AP Business Highlights

On Wednesday January 6, 2010, 5:47 pm

Some Fed officials conflicted on mortgage program

WASHINGTON (AP) -- Some Federal Reserve policymakers last month were conflicted over whether to expand or cut back a program intended to drive down mortgage rates and bolster the housing market, according to a document released Wednesday.

Minutes of the Fed's closed-door meeting on Dec. 15-16 revealed that a "few members" thought that the Fed's $1.25 trillion program to buy mortgage securities from Fannie Mae and Freddie Mac might need to be expanded and extended beyond its current end date of March 31. Such an additional dose of stimulus would be especially needed if the economic recovery were to weaken, they argued.

Service sector growing again, but new jobs are few

NEW YORK (AP) -- A gauge of the U.S. service sector returned to growth last month, aided by the holiday season's retail sales. The expansion reflected a slowly improving economy -- but it was too slight to generate much hiring.

The Institute for Supply Management, a private trade group, said Wednesday its service index rose to 50.1 in December from 48.7 in November. A level above 50 signals growth. Seven industries out of 18 reported growth, led by agriculture and retail.

The ISM's employment gauge, which hasn't grown in two years, shrank again in December, though at a slower pace than in November. It reached 44 in December, compared with 41.6 a month earlier.

Stocks end flat following mixed economic reports

NEW YORK (AP) -- Investors treaded water for a second day Wednesday as a batch of mixed economic reports and signs of division among Federal Reserve policymakers offered little insight into the economy.

Stocks ended little changed but modest gains pushed the Standard & Poor's 500 index to a new 15-month high. The cautious tone seen Tuesday and Wednesday comes as investors await the government's monthly employment report Friday.

The day's economic news wasn't enough to galvanize traders still trying to determine which direction the market will take in the early part of 2010.

The Dow Jones industrial average rose 1.66, or less than 0.1 percent, to 10,573.68.

Lockheed Martin to cut 1,200 jobs

BETHESDA, Md. (AP) -- Defense contractor Lockheed Martin said Wednesday it plans to cut 1,200 jobs to lower costs as it combines two units.

The cuts amount to less than 1 percent of the company's total work force of about 140,000. The company says employees who will lose their jobs will be notified by early April.

Lockheed announced in November its plans to combine two units in its electronics systems business -- the former Maritime Systems & Sensors business, based in Washington, D.C., and its Systems Integration unit in Owego, N.Y.

GM: Hundreds of dealerships could be restored

DETROIT (AP) -- Hundreds of the 1,350 General Motors Co. dealers who lost their franchises last year could see them restored in a congressionally mandated arbitration process that begins later this month, the company's interim CEO said Wednesday.

CEO and Chairman Ed Whitacre Jr. also said that new Chief Financial Officer Chris Liddell is a candidate for the CEO post. And Whitacre said he's not confident about selling the Swedish Saab brand.

In a wide-ranging talk with reporters at GM's Detroit headquarters, Whitacre also predicted that GM would be profitable this year, although he said that was dependent on the economy and other factors.

As temps plummet, orange juice prices heat up

NEW YORK (AP) -- Orange juice futures contracts reached their highest levels in two years Wednesday as a prolonged freeze in Florida endangers crop production.

"This is purely weather driven," said Richard Feltes, senior vice president and director of commodity research at MF Global.

Prices for frozen orange juice concentrate have risen sharply this week and went as high as $1.4965 per pound during trading Wednesday -- levels not seen since December 2007.

Other commodities have also gained this week, but mainly for other reasons such as investors rebalancing portfolios in the new year and the declining dollar.

Winter blast sends oil prices to 14-month high

Snow, ice and wind wreaked havoc on energy markets Wednesday, where a barrel of oil topped $83 a barrel for the first time since the fall of 2008.

Two fronts sent oil prices rocketing, however, the second being divisions among Federal Reserve policymakers over extending a program to bolster the U.S housing industry.

That sent the dollar sliding to three week lows, and crude prices to a 15-month high.

It could be a worrisome harbinger for consumers, who saw oil prices double last year for much the same reason.

Morgan Stanley wins suit against Discover

NEW YORK (AP) -- Morgan Stanley won a legal battle with former subsidiary Discover Financial Services over nearly $800 million Morgan Stanley says it was owed by the credit card company.

New York state Supreme Court Justice Barbara Kapnick ruled earlier this week that Discover Financial must pay Morgan Stanley a special dividend negotiated when Morgan Stanley spun off Discover in 2007.

At that time, the two agreed to share money received from an antitrust lawsuit Discover had pending against Visa Inc. and MasterCard Inc. Discover settled the antitrust case for $2.75 billion, of which Morgan Stanley was entitled to $1.2 billion.

Alleged Florida Ponzi schemer will plead guilty

FORT LAUDERDALE, Fla. (AP) -- A disbarred South Florida attorney agreed Wednesday to plead guilty later this month to charges arising from an alleged Ponzi scheme that cheated thousands of investors out of $1.2 billion.

Scott Rothstein is charged in a five-count indictment with racketeering, conspiracy and fraud in a scheme that ran from 2005 to 2009.

Rothstein attorney Marc Nurik said his client, who has been jailed without bail since his Dec. 1 arrest, is focused on returning as much money as possible to investors. Nurik said Rothstein's seized assets -- two dozen pieces of real estate, numerous luxury cars, jewelry, bank accounts and more -- are worth between $60 million and $100 million.

Kraft: Holders of 1.5 pct of Cadbury accept offer

LONDON (AP) -- Kraft Foods Inc. announced Wednesday that holders of 1.5 percent of shares in chocolate and gum maker Cadbury PLC have so far accepted its hostile takeover offer, but the U.S. company may gain more support as its offer price moves closer to Cadbury's market value.

The gap narrowed on Tuesday as Swiss food company Nestle said it would not make an offer for Cadbury, Kraft offered more cash in an alternative -- but no higher -- offer, and billionaire Warren Buffett, Kraft's biggest shareholder, warned against offering any more stock to sweeten the offer.

Kraft financed its enhanced cash offer by selling its U.S. pizza business to Nestle.

By The Associated Press

The Dow Jones industrial average rose 1.66, or less than 0.1 percent, to 10,573.68.

The broader Standard & Poor's 500 index rose 0.62, or 0.1 percent, to 1,137.14, while the Nasdaq composite index fell 7.62, or 0.3 percent, to 2,301.09.

Benchmark crude settled up $1.41 at $83.18 on the New York Mercantile Exchange, the highest close since Oct. 9, 2008.

In other Nymex trading in February contracts, heating oil rose less than a penny to settle at $2.2032 a gallon. Gasoline rose 1.16 cents to settle at $2.1366 a gallon. Natural gas futures rose 37.2 cents to settle just above $6.

In London, Brent crude for February delivery rose $1.30 to settle at $81.89 a barrel on the ICE Futures exchange.